Method and system for a deferred variable annuity with benefit payments as a function of an age-based withdrawal percent

ABSTRACT

A computer system for processing data relating to a deferred variable annuity contract during the accumulation phase includes a data storage device storing data relating to the deferred variable annuity contract, including a payment base value, a contract value, a withdrawal percent, a birth date of a relevant life, and a formula for determining, based on the withdrawal percent and a withdrawal base value, an available periodic benefit payment amount that does not decrease the payment base; and a processor. The processor is configured to determine a withdrawal percent applicable to a date, based on whether the date is prior to a date of a selected birthday of the relevant life.

CROSS-REFERENCE TO RELATED APPLICATIONS

This application is a continuation application of co-pending U.S. patentapplication Ser. No. 11/999,476 entitled METHOD AND SYSTEM FOR ADEFERRED VARIABLE ANNUITY WITH LIFETIME BENEFIT PAYMENTS AS A FUNCTIONOF A PREDETERMINED AGE-BASED WITHDRAWAL PERCENT TABLE, filed Dec. 5,2007, which application claims priority to and benefit of U.S.Provisional Patent Application No. 60/961,813, filed Jul. 24, 2007, theentire contents of all of which are herein incorporated by reference forall purposes.

BACKGROUND OF THE INVENTION

1. Field of the Invention

The present invention relates to a method and system for providing adeferred variable annuity with lifetime benefit payments; and moreparticularly, to a data processing method for administering a deferredvariable annuity contract for a relevant life, the annuity contracthaving a payment base, a contract value, and lifetime benefit payments,wherein the lifetime benefit payment available for each period is equalto: (a withdrawal percent)×(a withdrawal base), the withdrawal percentis responsive to a withdrawal percent table and the relevant life doesnot have to wait for the contract anniversary date in order to requestthe withdrawal percent that corresponds to his age as provided by thewithdrawal percent table.

2. Description of the Prior Art

An immediate annuity is typically used to provide an income streamwithin a predetermined length of time from the date the premium isreceived. The amount of income can be either fixed or variable in natureand typically these products do not provide an account value. A deferredannuity is typically used to provide accumulation and, potentially, afuture stream of annuity income. The deferred annuity comprises anaccumulation period during which the account value will vary with theunderlying investments and an annuitization period where the clientpurchases an immediate annuity with the account value available.Deferred and immediate annuities typically provide guaranteed income forlife, which transfers some portion or all of the risk of outliving one'saccumulated assets to the insurer.

One basis for distinguishing commonly available deferred annuities iswhether the annuity is classified as a “fixed annuity” or a “variableannuity”.

In a fixed annuity, the insurer guarantees a fixed rate of interestapplicable to each annuity deposit. Therefore, a fixed annuity isdesirable for those seeking a “safe” investment. The guaranteed interestrate may apply for a specified period of time, often one year or more.Often, a rate guaranteed for more than one year is called a “multi-yearguarantee”. The rate credited on a fixed annuity is reset periodically,moving in an amount and a direction that correlate the yields availableon fixed-income investments available to the insurer.

With a variable annuity, the annuity contract owner bears the investmentrisk. The relevant life typically has a choice of funds in which he/shecan direct where the annuity deposits will be invested. The variousfunds or sub-accounts may include stocks, bonds, money marketinstruments, mutual funds, and the like.

Variable annuity contracts typically provide a death benefit. Oftentimesduring the accumulation period this death benefit is related to thecontract value. That is, if the sub-accounts backing the contract valuehave performed poorly, then the death benefit may be reduced to aninsignificant amount. After annuitization, the death benefit can be afunction of the remaining payments of the annuity at the time of therelevant life's death. Further, if the annuity contract does not providea guarantee (discussed below), the contract will terminate when thecontract value goes to zero or some other amount specified in thecontract or rider.

Annuity contracts may also provide guarantees in several differentvariations. A Guaranteed Minimum Death Benefit (GMDB) is a guaranteethat provides a minimum benefit at the death of the relevant liferegardless of the performance of the underlying investments. AGuaranteed Minimum Income Benefit (GMIB) is a guarantee that willprovide a specified income amount at the time the contract isannuitized. The income payment will be dependent on previously stateddetails set out in the contract. A Guaranteed Minimum AccumulationBenefit (GMAB) is a benefit that guarantees a specified contract valueat a certain date in the future, even if actual investment performanceof the contract is less than the guaranteed amount. A Guaranteed MinimumWithdrawal Benefit (GMWB) is a guarantee of income for a specifiedperiod of time, and in some versions, the income stream is guaranteedfor life without requiring annuitization as in the guaranteed minimumincome benefit. However, this guarantee will automatically annuitize thecontract if the contract value is reduced to zero or some other amountspecified in the contract or rider.

Most deferred variable annuity products in the prior art typicallydetermine the amount of the yearly lifetime benefit payments, if any, tobe a predetermined percentage (withdrawal percent) of a withdrawal base.The withdrawal base amount is typically set at the time of the firstlifetime benefit payment and is fixed for the remainder of the term ofthe annuity product. Further, the withdrawal percent is typically fixedafter the first lifetime benefit payment is requested, or alternativelythe withdrawal percent varies slightly for the remainder of the term ofthe annuity product.

Many financial products and systems have been disclosed. These includefinancial products with the following features: a planning and liquiditymanagement system; computer-implemented system and method for designingand administering benefit plans; benefit plan with systemic withdrawalpayments and/or annuity payments; cost effective, dynamic allocation ofassets among a plurality of investments; automatically reallocatingassets based on a demographic, asset change or other event; providing aguaranteed growth rate and a guarantee of lifetime payments while theaccount balance changes over time; computer-controlled system ofmanaging fluctuating cash flows for a transaction; and, annuities havingspecific breakpoint ranges for mortality and expense rates (M&E) for theduration of the annuity, which may be associated with premiumpayment(s). Each one of these prior art references suffers from at leastthe following disadvantage(s): the relevant life must wait for thecontract anniversary date in order to request the withdrawal percent, ifany, that corresponds to his age as provided by a withdrawal percenttable.

Accordingly, there remains a need in the art for a data processingmethod for administering a deferred annuity contract for a relevant lifewherein the annuity contract has lifetime benefit payments and whereinthe lifetime benefit payment for each period is determined by thefollowing formula:LBP withdrawal=(a Withdrawal Percent)×(a Withdrawal Base),wherein the withdrawal percent is responsive to a withdrawal percenttable; and the relevant life does not have to wait for the contractanniversary date in order to request the withdrawal percent thatcorresponds to his age as provided by the withdrawal percent table.

SUMMARY OF THE INVENTION

The present invention provides a data processing method foradministering a deferred variable annuity contract during theaccumulation phase for a relevant life wherein the annuity contract haslifetime benefit payments, and wherein the lifetime benefit payment foreach period is determined by the following formula:LBP withdrawal=(a Withdrawal Percent)×(a Withdrawal Base),wherein the withdrawal percent is responsive to a withdrawal percenttable; and the relevant life does not have to wait for the contractanniversary date in order to request the withdrawal percent thatcorresponds to his age as provided by the withdrawal percent table. Inprior art annuity products, the relevant life is typically not eligibleto request the withdrawal percent that corresponds to his age on thewithdrawal percent chart until the contract anniversary date is reachedfor that year of the relevant life's age. The data processing methodadministers an annuity product having a payment base, a contract value,together with lifetime benefit payments.

Generally stated, the method of the invention calculates a payment basefor the annuity contract that is preferably a function of the previouspremium payments and withdrawals by the relevant life, and could includeinvestment performance on an annual or other basis (daily, monthly,etc.). The method of the invention calculates a contract value for theannuity contract. The method determines a withdrawal percent table forthe annuity contract that provides a particular withdrawal percent basedon each birthday of the relevant life. In one embodiment, during theaccumulation phase the system performs the following steps: (i) ifrequested by the relevant life, periodically accepting premium paymentsfrom the relevant life which increase the payment base and the contractvalue; (ii) if requested by the relevant life, or if other definedcriteria are reached, periodically calculating a lifetime benefitpayment withdrawal for the relevant life which decreases the contractvalue, wherein the lifetime benefit payment is determined by thefollowing formula:LBP withdrawal=(the Withdrawal Percent)×(a Withdrawal Base),wherein the withdrawal percent is responsive to a withdrawal percenttable and wherein the relevant life does not have to wait for thecontract anniversary date in order to request the withdrawal percentthat corresponds to his age as provided by the withdrawal percent table;and (iii) if requested by the relevant life, periodically calculating awithdrawal payment—that is in excess of the lifetime benefit payment—forthe relevant life, which decreases each of: the contract value and thepayment base. Upon the death of the relevant life, the present methodpays a death benefit to a beneficiary, wherein the death benefit is thegreater of: (a) the guaranteed death benefit amount; and (b) the presentcontract value.

Preferably, the annuity contract of the data processing method is adeferred variable annuity and further includes sub-accounts whose marketperformance can cause the contract value to increase or decrease. Inother aspects of the invention, the annuity contract may be selectedfrom the group of fixed, combination variable/fixed, and equity indexedannuities.

In addition, the account may be subject to M, E & A, 12 b-1 and fundlevel charges. These charges may or may not be assessed against thecontract value.

The guaranteed death benefit is paid to the beneficiary only if therelevant life dies during the accumulation phase. However, a guaranteeddeath benefit may also be payable during annuitization as well. Thelifetime benefit payment may be paid once yearly or periodicallythroughout the year; however, there is a maximum lifetime benefitpayment for any given year. In one embodiment, the present method allowsthe relevant life to have the opportunity to request a lifetime benefitpayment during each period that is up to the greater of (i) (the PaymentBase)×(the Withdrawal Percent); and (ii) (the Contract Value)×(theWithdrawal Percent). Therefore, in this embodiment, the lifetime benefitpayment is not based on a percentage of a fixed withdrawal base amount,and the withdrawal base amount may increase depending on the performanceof the underlying investments of the annuity product and if the contractvalue is greater than the payment base during a given period. However,if the contract value is less than the payment base, then the availablelifetime benefit payment is a percentage (Withdrawal Percent) of thepayment base.

The relevant life is eligible to take advantage of the withdrawalpercent provided by the predetermined withdrawal percent table andwithout being required to wait until the contract anniversary date forthe given year. Accordingly, the relevant life has the opportunity torequest a lifetime benefit payment that has the potential to afford agreater monetary value at an earlier point in time than prior artannuity products.

In one aspect, the value of the annuity payments, if necessary, equalsthe value of the most recent lifetime benefit payment. In other aspects,excess withdrawals, required minimum distributions or step-ups couldcause the value of the annuity payments or guaranteed lifetime benefitpayments to change.

In another aspect of the invention, there is provided a data processingmethod for administering a deferred variable annuity contract for arelevant life, the annuity contract having a payment base, a contractvalue and lifetime benefit payments, comprising the steps of: (i)calculating a payment base; (ii) calculating a contract value; (iii)determining a withdrawal percent table that provides a particularwithdrawal percent based on each birthday of the relevant life; and (iv)calculating a lifetime benefit payment, wherein the lifetime benefitpayment is determined by the following formula:LBP withdrawal=(the Withdrawal Percent)×(a Withdrawal Base),wherein the withdrawal percent is determined by said withdrawal percenttable and wherein the relevant life does not have to wait for thecontract anniversary date in order to request the withdrawal percentthat corresponds to his age as provided by the withdrawal percent table.

The invention can comprise a deferred variable annuity contract having:(i) means for calculating a payment base; (ii) means for calculating acontract value; (iii) means for determining a withdrawal percent tablethat provides a particular withdrawal percent based on each birthday ofthe relevant life; (iv) means for calculating a lifetime benefitpayment; wherein the lifetime benefit payment is determined by thefollowing formula:LBP withdrawal=(a Withdrawal Percent)×(a Withdrawal Base),wherein the withdrawal percent is predetermined according to thewithdrawal percent table and wherein the relevant life does not have towait for the contract anniversary date in order to request thewithdrawal percent that corresponds to his age as provided by apredetermined withdrawal percent table.

In another embodiment, the present invention comprises a system foradministering a deferred variable annuity contract during theaccumulation phase for a relevant life, the annuity contract having apayment base value, a contract value, and lifetime benefit payments,comprising: a storage device; a processor coupled to the storage device,the storage device storing instructions that are utilized by theprocessor, the instructions comprising: (i) receiving information fromsaid relevant life in order to establish the deferred variable annuitycontract; (ii) receiving lifetime benefit payment withdrawal requestsfrom the relevant life; (iii) calculating a lifetime benefit payment;wherein the lifetime benefit payment withdrawal is determined accordingto the following formula:LBP withdrawal=(a Withdrawal Percent)×(a Withdrawal Base),wherein the withdrawal percent is responsive to a withdrawal percenttable and the relevant life does not have to wait for the contractanniversary date in order to request the withdrawal percent thatcorresponds to his age, as provided by said withdrawal percent table.

The present invention solves several of the problems associated withconventional administration of annuity contracts. Determination of thelifetime benefit payment is accomplished via an improved formula thatprovides the potential to afford a greater monetary value for thelifetime benefit payment at an earlier point in time than prior artannuity products. The relevant life is afforded increased security bythe availability of a potentially enhanced lifetime benefit paymentimmediately on his birthday, rather than being required to wait for thecontract anniversary date to arrive.

Other objects, features, and characteristics of the present invention,as well as the methods of operation and functions of the relatedelements of the structure, and the combination of parts and economies ofmanufacture, will become more apparent upon consideration of thefollowing detailed description with reference to the accompanyingdrawings, all of which form a part of this specification.

BRIEF DESCRIPTION OF DRAWINGS

A further understanding of the present invention can be obtained byreference to a preferred embodiment set forth in the illustrations ofthe accompanying drawings. Although the illustrated embodiment is merelyexemplary of systems for carrying out the present invention, both theorganization and method of operation of the invention, in general,together with further objectives and advantages thereof, may be moreeasily understood by reference to the drawings and the followingdescription. The drawings are not intended to limit the scope of thisinvention, which is set forth with particularity in the claims asappended or as subsequently amended, but merely to clarify and exemplifythe invention.

For a more complete understanding of the present invention, reference isnow made to the following drawings in which:

FIG. 1 is a flow chart illustrating the manner in which a new annuitycontract application is processed;

FIG. 2 is a flow chart that illustrates in more detail the manner inwhich an annuity contract is established;

FIG. 3 is a flow chart that illustrates in more detail the manner inwhich an account value is set up;

FIG. 4 is a flow chart that illustrates in more detail the manner inwhich customer communication is established;

FIG. 5 is a flow chart illustrating the appropriate steps after awithdrawal is requested;

FIG. 6 is a flow chart illustrating a preferred embodiment of thepresent invention comprising a data processing method for administeringan annuity contract for a relevant life;

FIG. 7 is a diagram illustrating the system on which the methods of thepresent invention may be implemented in accordance with an embodiment ofthe present invention;

FIG. 8 depicts a table illustrating lifetime benefit payments issued tothe relevant life for annuities associated with various benefit plansalong with a supplemental table in accordance with an embodiment of thepresent invention; and

FIG. 9 depicts a graph illustrating lifetime benefit payments issued tothe relevant life for annuities associated with various benefit plans inaccordance with an embodiment of the present invention.

DESCRIPTION OF THE PREFERRED EMBODIMENTS

As required, a detailed illustrative embodiment of the present inventionis disclosed herein. However, techniques, systems and operatingstructures in accordance with the present invention may be embodied in awide variety of forms and modes, some of which may be quite differentfrom those in the disclosed embodiment. Consequently, the specificstructural and functional details disclosed herein are merelyrepresentative, yet in that regard, they are deemed to afford the bestembodiment for purposes of disclosure and to provide a basis for theclaims herein, which define the scope of the present invention. They aredeemed to afford the best embodiment for purposes of disclosure; butshould not be construed as limiting the scope of the invention. Thefollowing presents a detailed description of the preferred embodiment ofthe present invention.

The present invention comprises a data processing method foradministering a deferred variable annuity contract having a paymentbase, a contract value, and lifetime benefit payments. As used herein,the term “annuity contract” means a set of rules and other data that arereflected in a computer processing system for operations of the annuityproduct.

In the present invention, the lifetime benefit available for each periodis determined by the following formula:LBP withdrawal=(a Withdrawal Percent)×(a Withdrawal Base),wherein the withdrawal percent is responsive to a withdrawal percenttable and wherein the relevant life does not have to wait for thecontract anniversary date in order to request the withdrawal percentthat corresponds to his age as provided by the withdrawal percent table.The present data processing method is preferably in the form of a riderto a variable annuity contract. In another aspect of the invention, thepresent data processing method is not in the form of a rider, but is apart of the base contract. In exchange for paying higher fees, therelevant life receives several advantages by selecting the method andsystem of the present invention, which provides a lifetime benefitpayment available for each period that is related to a withdrawalpercent, which is available immediately at the birthday of the relevantlife, regardless of the actual contract anniversary date. Theseadvantages include the following: The relevant life will have theopportunity to request a lifetime benefit payment during each periodthat is based on a withdrawal percent that is provided by apredetermined withdrawal percent table and is available immediately atthe birthday of the relevant life. The relevant life is eligible to takeadvantage of the withdrawal percent provided by the withdrawal percenttable and without being required to wait until the contract anniversarydate for the given year. Accordingly, the relevant life has theopportunity to request a lifetime benefit payment that has the potentialto afford a greater monetary value at an earlier point in time thanprior art annuity products. Significantly, the relevant life takesadvantage of a potentially higher withdrawal percent value at an earlierpoint in time during any given year and as soon as his birthday haspassed, as compared to prior art annuity products which do not allow theage-based withdrawal percent that corresponds to the relevant life's ageto be taken until after the given anniversary date of each contractperiod. Therefore, the present invention provides a simpler productdesign, which allows the relevant life to get the age-based withdrawalpercentage upon attaining a specific age rather than having to waitbeyond the birthday. The present invention allows a higher livingbenefit payment months earlier than other annuity contracts that limitsthe age-based withdrawal percentage so that it only changes on ananniversary following the birthday.

The present invention comprises a data processing method foradministering a deferred variable annuity contract for a relevant life,the annuity contract having a payment base, a contract value andlifetime benefit payments, comprising the steps of: (i) calculating apayment base; (ii) calculating a contract value; (iii) determining awithdrawal percent table that provides a particular withdrawal percentbased on each birthday of the relevant life; and (iv) calculating alifetime benefit payment wherein the lifetime benefit payment isdetermined by the following formula:LBP withdrawal=(the Withdrawal Percent)×(a Withdrawal Base),wherein the withdrawal percent is responsive to said withdrawal percenttable and wherein the relevant life does not have to wait for thecontract anniversary date in order to request the withdrawal percentthat corresponds to his age as provided by the withdrawal percent table.

It should be understood that as used herein the term “periodically”includes method steps that in certain aspects may only be performedonce. In other aspects, such “periodically” performed method steps maybe performed more than once as described herein.

The following definitions are given hereunder to better understand termsused in the specification.

-   “Relevant Life” or “Covered Life”: The term relevant life or covered    life is the governing life for determination of the living benefits    provided under this illustrative embodiment. Covered life (or    relevant life) may refer to any one or more of the following: an    owner, joint owner, annuitant, joint annuitant, co-owner,    co-annuitant or beneficiary.-   “Withdrawal Base”: The withdrawal base is the amount used in one    embodiment of the present invention to determine the lifetime    benefit payment. Preferably, the withdrawal base may be equal to the    amount of the original premium, the payment base value, the contract    value, or the greater of the payment base value and the contract    value.-   “Payment Base”: The payment base (PB) (or more accurately the    payment base value) is the amount used in one embodiment of the    present invention to determine the lifetime benefit payment and the    rider charge. In one embodiment of the present invention, the    initial payment base value equals the initial premium.-   “Premium”: 100% of the dollar amount of the initial or subsequent    premium payments deposited into the contract before application of    any sales charges or payment enhancements.-   “Withdrawal Request”: A request made by the relevant life to    withdraw funds during the “accumulation phase” of the contract. One    type of withdrawal is a lifetime benefit payment. Any withdrawal    that is in excess of the lifetime benefit payment may: (i) decrease    the contract value below the minimum contract value; (ii) decrease    the payment base value; and (iii) decrease the guaranteed death    benefit.-   “Lifetime Benefit Payment”: A benefit payment that is available    until the death of the relevant life. The lifetime benefit payment    may be paid yearly in one embodiment. The total lifetime benefit    payment for the year may also be distributed monthly, quarterly or    any other defined period. Preferably, the lifetime benefit payment    is only available if the covered life age is 60 (or other    predetermined age) or older. Preferably, if the relevant life is age    59 (or other predetermined age) or younger, the LBP is equal to    zero. Other age restrictions can also be utilized for the lifetime    benefit payment. Preferably, the lifetime benefit payment is    determined by the following formula:    LBP=(a Withdrawal Percent)×(a Withdrawal Base),

wherein the withdrawal percent is responsive to a withdrawal percenttable and wherein the relevant life does not have to wait for thecontract anniversary date in order to request the withdrawal percentthat corresponds to his age as provided by the withdrawal percent table.

It should be understood that in other embodiments of the presentinvention, other formulas may be utilized for determining the lifetimebenefit payment.

-   “Contract Value”: The contract value (CV) is a numerical measure of    the relative worth of a variable annuity product during the    accumulation phase. The contract value is determined by adding the    amount of purchase payments made during the accumulation phase,    deducting management fees, deducting contract fees, deducting    optional rider fees and surrenders made by the owner, and adjusting    for the relative increase (or decrease) of the investment option(s)    chosen by the owner. It should be understood that in other    embodiments of the present invention, other formulas may be utilized    for determining the contract value.-   “Sub-account”: Variable account investments within the variable    annuity contract, such as mutual funds, stocks and bonds.-   “Withdrawal”: Also known as a “surrender”, a relevant life may    withdraw up to the contract value at any time.-   “Death Benefit”: The death benefit provision guarantees that upon    the death of the relevant life a death benefit (DB) is paid to a    beneficiary named in the contract that is equal to the greater of    the guaranteed death benefit or the contract value as of the date    the annuity company receives due proof of death. It should be    understood that in other embodiments of the present invention, other    formulas may be utilized for determining the guaranteed death    benefit.-   “Benefit Amount”: In one embodiment of the present invention, the    benefit amount is used to calculate that amount of the death    benefit. Preferably, the benefit amount is equal to the premium    payments minus any lifetime benefit payments or withdrawals.-   “AMF”: Annual Maintenance Fee.-   “Annuity Commencement Date”: The annuity commencement date (ACD) is    the date upon which the contract enters the “annuitization phase”.-   “Withdrawal Percent”: In one embodiment of the present invention,    the withdrawal percent (WP) is used to determine the amount of the    lifetime benefit payment. It should be understood that in other    embodiments of the present invention, other formulas may be utilized    for determining the lifetime benefit payment.-   “PB increase”: Payment Base increase.-   “Step-Up”: An increase to the payment base value that is available    if the contract value increases because of favorable performance of    the underlying investments. Preferably, the step-up is guaranteed at    a predetermined percentage.-   “Partial Surrender”: Partial surrender means the gross amount of the    partial surrender and will include any applicable contingent    deferred sales charges.-   “Covered Life Change”: Any contractual change before ACD, which    causes a change in the covered life, will result in a reset in the    benefits provided under the rider and allows the issuing company to    impose the fund allocation restrictions.-   “Annuity Contract”: The term annuity contract means a set of rules    and other data that are reflected in a computer processing system    for operations of the annuity product.-   “Issue Rules”: The issuance of a contract may be subject to    established requirements known as issue rules.

The following detailed illustrative embodiment(s) is presented toprovide a more complete understanding of the invention. The specifictechniques, systems, and operating structures set forth to illustratethe principles and practice of the invention may be embodied in a widevariety of sizes, shapes, forms and modes, some of which may be quitedifferent from those in the disclosed embodiment. Consequently, thespecific structural and functional details disclosed herein areexemplary. They are deemed to afford the best embodiment for purposes ofdisclosure; but should not be construed as limiting the scope of theinvention.

Covered Life in Single and Joint/Spousal Election(s)

The covered life, or relevant life, may have a single life election orjoint/spousal continuation election as described more fully herein.

Single Life Election:

If a natural owner, the covered life is the owner and the joint owner(if any) on the rider effective date. If a non-natural owner, thecovered life is the annuitant on the rider effective date. Allage-contingent benefit provisions are based on the attained age of theoldest covered life.

Joint/Spousal Continuation Election:

If a natural owner, the covered life is both spouses (as defined byFederal Law). All age-contingent benefit provisions are based on theattained age of the youngest covered life.

Issues Rules

The following issue rules are set forth to provide a more completeunderstanding of this illustrative embodiment of the present invention.It should be understood by those skilled in the art that these issuerules are set forth for illustrative purposes only and that other rulesmay be utilized. Accordingly, the issue rules set forth below should notbe construed as limiting the scope of the invention.

The issue rules may include a maximum issue age. In one embodiment, theriders are not available if any covered life or annuitant is age 81 (orother predetermined age) or greater on the rider effective date. Inanother embodiment, the riders are not available if any covered life orannuitant is age 76 (or other predetermined age) or greater on the Ridereffective date. The rider may be elected on contract issue orpost-issue.

Single Life Election: No additional requirements

Joint/Spousal Continuation Election: (This May Also IncludeCo-Annuitants)

One of the following must apply:

-   -   If a natural owner purchases Joint/Spousal election, and adds a        spousal joint owner, then the owner can name anyone else as the        designated beneficiary, because by contract disposition, the        joint owner will receive the death benefit.    -   If a natural owner purchases joint/spousal election, and does        not add a joint owner, then the owner must name their spouse as        the designated beneficiary.    -   If a non-natural owner purchases joint/spousal election, then        the annuitant's spouse must be the designated beneficiary.    -   A joint owner who is not the owner's spouse is not allowed.        Calculation of the Withdrawal Percent (WP)

The Withdrawal Percent (WP) is used to determine the amount of thelifetime benefit payment. In a preferred embodiment, a predeterminedwithdrawal percent chart (below) provides a particular WithdrawalPercent for each year of the relevant life's life according to eachbirthday of the relevant life. In this embodiment, the relevant lifedoes not have to wait for the contract anniversary date in order torequest the withdrawal percent that corresponds to his age as providedby a predetermined withdrawal percent chart. As shown below, thewithdrawal percent chart may group certain age ranges into the samewithdrawal percent. Alternatively, each age of the relevant life may beprovided with a different Withdrawal Percent.

In another embodiment, the WP is determined at the later of; (i) theattained age of the covered life on the most recent contract anniversaryprior to the first withdrawal, or (ii) the contract anniversaryimmediately following the covered life's 60^(th) birthday (or otherpredetermined age).

Withdrawal Percentage Chart

Single Life Election:

(Note: the Following Percentages and Ages, if Ages are in Fact Used, canVary)

5.0% for attained ages 60 to 64;

5.5% for attained ages 65 to 69;

6.0% for attained ages 70 to 74;

6.5% for attained ages 75 to 79; and

7.0% for attained ages 80 and above.

Joint/Spousal Continuation Election:

4.5% for attained ages 60 to 64;

5.0% for attained ages 65 to 69;

5.5% for attained ages 70 to 74;

6.0% for attained ages 75 to 79; and

6.5% for attained ages 80 and above.

Calculation of the Payment Base (PB)

The Payment Base (PB) (or more accurately payment base value) is theamount used to determine the lifetime benefit payment (LBP) and therider charge.

A total partial surrender amount in a contract year that exceeds the LBPby not more than $0.12 (the tolerance amount) will be deemed not morethan the LBP. This provision recognizes that owners may take the LBP ininstallments over the year, and the amount of installment may round theproportional distribution amount to the higher cent. Therefore, ownersintended to stay within the LBP may exceed it by only a few cents. Themaximum PB is $5,000,000.

If this rider is effective on the contract issue date, then the PBequals the X % of the initial premium. If this rider is effective afterthe contract issue date, then the PB equals 100% of the dollar amount ofthe contract value on the rider effective date, less any paymentenhancements received in the last twelve months.

When subsequent premium payments are received, the PB will be increasedby 100% of the dollar amount of the subsequent premium payment. Whenevera partial surrender is made prior to the contract anniversaryimmediately following the covered life's 60^(th) birthday (or otherpredetermined age), the payment base is reduced for an adjustmentdefined below.

“Threshold” definition: 5% single/4.5% joint/spousal multiplied by thegreater of the payment base or contract value at the beginning of thecontract year plus subsequent premiums prior to a partial surrender.

For cumulative partial surrenders during each contract year that areequal to or less than the threshold, the adjustment is equal to thedollar amount of the partial surrender.

For any partial surrender that first causes cumulative partialsurrenders during the contract year to exceed the threshold, theadjustment is the dollar amount of the partial surrender that does notexceed the threshold. For the portion of the withdrawal that exceeds thethreshold, the adjustment is a factor. The factor is as follows:1−(A/(B−C)) where

-   -   A=partial surrenders during the contract year in excess of the        threshold;    -   B=contract value immediately prior to the partial surrender; and    -   C=the threshold, less any prior partial surrenders during the        contract year. If C results in a negative number, C becomes        zero.

For partial surrenders during each contract year, where the sum of priorpartial surrenders are in excess of the threshold, the adjustment is afactor. The factor is applied to the payment base immediately before thesurrender. The factor is as follows:1−(A/B) where

-   -   A=the amount of the partial surrender;    -   B=contract value immediately prior to the partial surrender.

Whenever a partial surrender is made on or after the contractanniversary immediately following the covered life's 60^(th) birthday(or other predetermined age), the PB will be equal to the amountdetermined as follows:

-   -   If the total partial surrenders since the most recent contract        anniversary are equal to or less than the current lifetime        benefit payment (LBP), the PB is not reduced by the amount of        the partial surrender.    -   If the total partial surrenders since most recent contract        anniversary are more than the current LBP, but all partial        surrenders were paid under the Automatic Income Required Minimum        Distribution (AI RMD), the PB is not reduced by the amount of        partial surrender.

For any partial surrender that first causes cumulative partialsurrenders during the contract year to exceed the current LBP and theRMD exception above does not apply the adjustment is a factor. Thefactor is as follows:1−(A/(B−C)) where

-   -   A=partial surrenders during the contract year in excess of the        LBP;    -   B=contract value immediately prior to the partial surrender; and    -   C=the LBP, less any prior partial surrenders during the contract        year. If C results in a negative number, C becomes zero.

For additional partial surrender(s) in a contract year, where the sum ofall prior partial surrenders exceed the current LBP, the PB will bereduced by applying a factor. The factor is as follows:1−(A/B) where

-   -   A=the amount of the partial surrender;    -   B=contract value immediately prior to the partial surrender.        Benefit Increase Provision

In one embodiment, the withdrawal percent will be set at the attainedage of the first withdrawal and will not increase thereafter. In anotherembodiment, the benefit increase is facilitated through an increase inthe payment base.

On every contract anniversary up to and including the contractanniversary immediately following the covered life's 80^(th) birthday(or other predetermined age), it will be determined if an increase inthe PB is applicable. If an increase is applicable, the PB will increaseby the factor below, subject to a minimum of zero and a maximum of 10%(note: the percentage could change or it could be a full step UP (nolimit)):(contract value prior to rider charge taken on currentanniversary/maximum contract value)−1

-   -   where maximum contract value equals the greater of (A) or (B)        below:        -   (A) the contract value on the rider effective date, plus            premiums received after the rider effective date;        -   (B) the contract value on each subsequent contract            anniversary, excluding the current contract anniversary plus            premiums received after the contract anniversary date.            (Similar to MAV except that there is no adjustment for            withdrawals.)            The WP is locked in on the date of the first withdrawal.            Calculation of the Lifetime Benefit Payment

The LBP is available until the death of any covered life or until thewithdrawal benefit is revoked.

A total partial surrender amount in a contract year that exceeds the LBPby not more than $0.12 (the tolerance amount) will be deemed not morethan the LBP. This provision recognizes that owners may take the LBP ininstallments over the year, and the amount of installment may round theproportional distribution amount to the higher cent. Therefore, ownersintended to stay within the LBP may exceed it by only a few cents.

-   -   On the Rider effective date, the following applies to the        calculation of the LBP.    -   If the covered life is age 60 (or other predetermined age) or        older on the rider effective date, the LBP is equal to the        payment base multiplied by the WP for the covered life's        attained age.    -   If the covered life is Age 59 (or other predetermined age) or        younger on the rider effective date, the LBP is equal to zero.

On any contract anniversary immediately following the covered life's60^(th) birthday (or other predetermined age), the following describesin more detail the calculation of the LBP.

The LBP is equal to the WP multiplied by the withdrawal base. Thewithdrawal base may be equal to the payment base, the contract value orthe greater of payment base or the contract value on the anniversary forboth the Age-Based and the Market-Based Riders, single and spousal. TheLBP can fluctuate year to year due to market performance, but will neverbe lower than the WP multiplied by the PB as long as the covered lifehas reached the age of 60 (or other predetermined age). Also, if theaccount value on the anniversary exceeds the PB, the LBP may decrease infuture years but will never be less than the PB multiplied by the WP.

When a subsequent premium payment is made after the contract anniversaryimmediately following the covered life's 60^(th) birthday (or otherpredetermined age), the LBP is equal to the greater of: (i) the WP, onthe most recent contract anniversary, multiplied by the greater of thePB or contract value immediately after the subsequent premium isreceived, or (ii) the prior LBP.

Whenever a partial surrender is made on or after the contractanniversary immediately following the covered life's 60^(th) birthday(or other predetermined age):

-   -   If the PB is zero due to withdrawals, the LBP is equal to zero.        During the deferral stage, subsequent premiums may be made to        re-establish the PB and the LBP.

The LBP will be equal to the amount determined in either one as follows:

-   -   If the total partial surrenders since the most recent contract        anniversary are equal to or less than the current lifetime        benefit payment (LBP), the LBP is equal to the LBP immediately        prior to the partial surrender.    -   If the total partial surrenders since the most recent contract        anniversary are more than the current LBP, but all partial        surrenders were paid under the Automatic Income Required Minimum        Distribution (AI RMD), the provisions of above will apply.    -   If the total partial surrenders since the most recent contract        anniversary are more than the current LBP and the AI RMD        exception above does not apply, the LBP is reset to the WP on        the most recent contract anniversary multiplied by the greater        of the PB or contract value immediately after the partial        surrender.

The contract owner may request an amount less than, equal to, or greaterthan the lifetime benefit payment. Total partial surrenders taken duringa contract year on or after the contract anniversary immediatelyfollowing the covered life's 60^(th) birthday (or other predeterminedage) which exceed the LBP may reduce future LBP values and may reducethe PB. If the total amount requested by the contract owner during acontract year is less than the lifetime benefit payment, the excesscannot be carried over to increase future years' lifetime benefitpayments.

Contingent Deferred Sales Charge (CDSC)—Free Up to the Amount of the LBP

If the LBP exceeds the actual withdrawal amount (AWA) on the most recentcontract anniversary, any contingent deferred sales charge (CDSC) willbe waived up to the LBP amount.

Death Benefit Before Annuity Commencement Date

For both single and joint/spousal election, a death benefit may beavailable on the death of any owner or annuitant. For joint/spousalelection only, no death benefit will be available when a covered life isthe beneficiary, and the beneficiary dies. The death benefit provisionguarantees that upon death a death benefit (DB) will be paid equal tothe greater of the death benefit or the contract value as of the dateproof of death is received. The rider charge is not assessed on death.

When proof of death is processed, the contract will go into suspensemode. No charges will apply during that period. The amount available tobe paid as a death benefit under the terms of the rider is a return ofpremium adjusted for subsequent premium payments and partial surrenders.

At the rider effective date:

-   -   If the rider is effective on the contract issue date, then the        DB equals the initial premium.    -   If the rider is effective after the Contract Issue Date, then        the DB equals 100% of the dollar amount of the Contract Value on        the Rider effective date, less any bonus payments paid into the        contract by the company in the last 12 months.

When a subsequent premium payment is received, the DB will be increasedby 100% of the dollar amount of the subsequent premium payment. If thewithdrawal feature is revoked, all future withdrawals from the deathbenefit will be fully proportional as of the date it is revoked.

Whenever a partial surrender is made prior to the contract anniversaryimmediately following the covered life's 60^(th) birthday (or otherpredetermined age), the death benefit is reduced for an adjustmentdefined below.

For the “threshold” definition, see the definition described in thesection entitled “Calculation of the Payment Base” supra.

For cumulative partial surrenders during each contract year that areequal to or less than the threshold, the adjustment is the dollar amountof the partial surrender. For any partial surrender that first causescumulative partial surrenders during the contract year to exceed thethreshold, the adjustment is the dollar amount of the partial surrenderthat does not exceed the threshold, and the adjustment for the remainingportion of the partial surrender is a factor. The factor is applied tothe portion of the death benefit that exceeds the threshold. The factoris defined as follows:1−(A/(B−C)) where

-   -   A=partial surrenders during the contract year in excess of the        threshold;    -   B=contract value immediately prior to the partial surrender; and    -   C=the threshold less any prior partial surrenders during the        contract year. If C results in a negative number, C becomes        zero.

For partial surrenders during each contract year, where the sum of theprior partial surrenders in the year that are in excess of thethreshold, the adjustment is a factor. The factor is applied to theadjusted death benefit immediately before the surrender. The factor isdefined as follows:1−(A/B) where

-   -   A=the amount of the partial surrender;    -   B=contract value immediately prior to the partial surrender.

Whenever a partial surrender is made on or after the contractanniversary immediately following the covered life's 60^(th) birthday(or other predetermined age), the DB will be equal to the amountdetermined as follows:

-   -   If the total partial surrenders since the most recent contract        anniversary are equal to or less than the current lifetime        benefit payment (LBP), the DB becomes the DB immediately prior        to the partial surrender, less the amount of partial surrender,        less the amount of partial surrender paid out of the general        account of the company.    -   If the total partial surrenders since the most recent contract        anniversary are more than the current LBP, but all partial        surrenders were paid under the Automatic Income RMD (AI RMD),        the DB becomes the DB immediately prior to the partial        surrender, less the amount of partial surrender, less the amount        of partial surrender paid out of the general account of the        company.    -   If the total partial surrenders since the most recent contract        anniversary exceed the total current LBP and the AI RMD        exception does not apply, the adjustment is the dollar amount of        the partial surrender that does not exceed the LBP, and the        adjustment for the remaining portion of the partial surrender is        a factor. The factor is applied to the portion of the Death        benefit that exceeds the LBP. The factor is as follows:        1−(A/(B−C)) where        -   A=partial surrenders during the contract year in excess of            the LBP;        -   B=contract value immediately prior to the partial surrender.        -   C=LBP less any prior partial surrenders during the contract            year. If C results in a negative number, C=0 (zero).

For partial surrenders during each contract year, where the sum of theprior partial surrenders in the year that are in excess of the currentLBP, the adjustment is a factor. The factor for adjustments for partialsurrenders for the DB is applied to the adjusted DB immediately beforethe surrender. The factor is as follows:1−(A/B) where

-   -   A=the amount of the partial surrender;    -   B=contract value immediately prior to the partial surrender.        Contract Value (CV) Reduces Below Minimum Account Rules

The minimum contract value rules are an optional feature of the presentinvention and do not apply to the preferred embodiments. If the minimumcontract value rules are selected to be applied, then the followingrules are used. The minimum contract value (MCV) is defined as 20% orother predetermined percentage of the payment base on the date of awithdrawal request. Lifetime benefit payments cannot reduce the contractvalue below this minimum threshold. Only sub-account performance andwithdrawals in excess of the LBP can decrease the contract value belowthe MCV.

-   -   If total partial surrenders since the most recent contract        anniversary are less than or equal to the difference between the        contract value and the MCV, the contract value will be reduced        by the total partial surrender.    -   If the contract Value at the time of a partial surrender is less        than or equal to the MCV, the contract value will not be        decreased for the partial surrender. The requested partial        surrender will be paid out of the general account assets of the        company.    -   If the contract value immediately before the partial surrender        is greater than the MCV, but would drop below the MCV after the        partial surrender, the contract value will be liquidated to pay        the LBP only to the extent it would equal the MCV. The remaining        portion of the LBP that is not funded by the contract value will        be paid out of the general account assets of the company.        Covered Life Change(s)

Any contractual change before the annuity commencement date (ACD) whichcauses a change in the covered life will result in a reset in thebenefits provided under the rider, and allows fund allocationrestrictions to be imposed.

Covered life changes in the first 6 months of the contract issue date(or during another time period) will not cause a change in the DB or PB.However, the WP and LBP may change based on the attained age of thecovered life after the covered life change.

-   -   If the covered life is changed and a withdrawal has been taken,        both within the first 6 months from contract issue date (or        during another time period), then the LBP and WP will be        calculated at the time of the covered life change and will be        based on the new covered life's attained age on the rider        effective date.    -   If the covered life is changed and a withdrawal has not been        taken, both within the first 6 months from the contract issue        date (or during another time period), then the LBP and WP will        be calculated upon the first withdrawal:    -   If the first withdrawal is after the first 6 months and before        the first contract anniversary (or during another time period),        then the LBP and WP will be based on the new covered life's        attained age on the rider effective date.    -   If the first withdrawal occurs after the first contract        anniversary, then the LBP and WP will be calculated based on the        new covered life's attained age on the most recently attained        contract anniversary.    -   If the oldest covered life after the change is greater than the        age limitation of the rider at the time of the change, then the        rider will terminate, and the death benefit will be equal to the        contract value.        Single Life Election:

Covered life changes after the first 6 months of contract issue datewill cause a reset in the benefits. If the oldest covered life after thechange is equal to or less than the age limitation of the rider at thetime of the change, then either below will automatically apply.

-   -   If the rider is not currently available for sale, the withdrawal        feature of the rider will be revoked.        -   The existing rider will continue with respect to the death            benefit only.        -   The death benefit will be recalculated to the lesser of the            contract value or the DB on the effective date of the            covered life change.        -   The rider charge is assessed on the revocation date, and            then will no longer be assessed.    -   If the rider is currently available for sale, the existing rider        will continue with respect to all benefits, at the current        contract rider charge.        -   The PB amount will be reset to the minimum of the contract            value or the PB on the date of the change.        -   The DB will be reset to the minimum of the contract value or            the DB on the date of the change        -   The WP and LBP will be recalculated on the date of the            change, and will be based upon the following.            -   A. If withdrawals are taken prior to the first contract                anniversary, a new covered life's attained age on the                rider effective date will be used.            -   B. If withdrawals are taken after the first contract                anniversary, the new covered life's attained age on the                contract anniversary prior to the first withdrawal will                be used.    -   The maximum contract value will be recalculated to equal the        contact value on the date of the covered life change.

If the oldest covered life after the change is greater than the agelimitation of the rider at the time of the change, the rider willterminate, and the DB will be equal to the contract value. If the rideris no longer available for sale and the issue age of the rider haschanged (to be determined on a non-discriminatory basis), and a coveredlife change occurs, and it exceeds that newly determined age limitation,then rider will terminate, and the death benefit will be equal tocontract value.

Joint Life Elections

Where covered life changes after the first 6 months of contract issuedate, and if the owner and owner's spouse are no longer married, forreasons other than death, then covered life changes may occur asfollows:

If surrenders have not been taken from the contract, then the PB, the DBand the MCV remain the same; the covered life will be reset and the WPscale will be based on the youngest covered life as of the date of thechange. Additionally, the following covered life changes may occur.

-   -   Owner may remove spouse as covered life.    -   Owner may remove spouse as a covered life and replace original        spouse with new spouse. (These changes do not have to happen on        the same day.)

If surrenders have been taken from the contract, then the followingcovered life changes may occur.

-   -   Owner may remove spouse as covered life.    -   The PB, the DB and the MCV remain the same.    -   The WP scale will be based on the attained age of the remaining        covered life as of the date of the change.    -   Any changes other than removing the spouse will follow the rules        below.

If the oldest covered life after the change is greater (older) than theage limitation of the rider at the time of the change, then the riderwill terminate. The death benefit will be equal to contract value.

If any other contractual change causes a change in the covered life,then either will automatically apply:

-   -   If the oldest covered life after the change is equal to or less        (younger) than the age limitation of the rider at the time of        the change, then the withdrawal feature of the rider will be        revoked. The existing rider will continue with respect to the        death benefit only. The rider charge is assessed on revocation        date, and then will no longer be assessed.    -   If the oldest covered life after the change is greater (older)        than the age limitation of the rider at the time of the change,        then the rider will terminate. The death benefit will be equal        to the contract value. If the rider is no longer available for        sale and the issue age of the rider has been changed (to be        determined on a non-discriminatory basis), and a covered life        change occurs, and they exceed that newly determined age        limitation, then rider will terminate, and the death benefit        will be equal to the contract value.    -   If the spouse dies and is the primary beneficiary and the        covered life, then the owner may remove them from the contract.        The PB, DB and MCV will remain the same. The WP will be        recalculated as follows:    -   If there has been a partial surrender since the rider effective        date, then WP will remain at the current percentage.    -   If there has not been a partial surrender since the rider        effective date, then the WP will be based on the attained age of        the remaining covered life on the contract anniversary prior to        the first surrender.        Spousal Continuation        Single Life Election:

In the event the contract owner dies and spousal continuation iselected, the contract value will increase to the DB value (the greaterof the contract value and the DB). The covered life will bere-determined on the date of the continuation. If the covered life isless than age 81 (or other predetermined age) at the time of thecontinuation, then either of the following will automatically apply:

-   -   If the rider is not currently available for sale, the withdrawal        feature of the rider will be revoked. The existing rider will        continue with respect to the death benefit only (i.e., the        withdrawal feature will terminate). The rider charge is not        assessed on the revocation date, and then no longer assessed.    -   If the rider is currently available for sale, the existing rider        will continue with respect to all benefits at the current        contract rider charge. The payment base and the death benefit        will be set equal to the contract value on the continuation        date. The LBP and WP will be recalculated on the continuation        date. The WP will be recalculated based on the age of the oldest        covered life on the effective date of the spousal continuation.        If the WP had previously been locked in, then it will become        unlocked and can change based on the next withdrawal. The        maximum contract value will be set to the contract value on the        continuation date.

If the covered life is greater than or equal to 81 (or otherpredetermined age) at the time of the continuation, the rider willterminate. The death benefit will be equal to the contract value.

Joint/Spousal Continuation Election

In the event that the contract owner dies and spousal continuation iselected, the contract value will be increased to the DB value (thegreater of the contract value and the DB). The spouse may do thefollowing.

Continue the Contract and the Rider.

The existing rider will continue with respect to all benefits, at thecurrent contract rider charge. The payment base will be equal to thegreater of contract value or payment base on the continuation date. TheLBP will be recalculated to equal the withdrawal percent multiplied bythe greater of the contract value or the payment base on thecontinuation date. The maximum contract value will be the greater of thepayment base or the contract value on the continuation date. The DB willbe equal to the bumped up contract value on the continuation date.

The WP recalculation rule:

-   -   The WP will remain at the current percentage if there has been a        partial surrender since the rider effective date.    -   If there has not been a partial surrender, the WP will be based        on the attained age of the remaining covered life on the        contract anniversary prior to the first surrender/withdrawal.        The contract owner can not name a new owner on the contract. The        contract owner can name a new beneficiary on the contract. Any        new beneficiary added to the contract will not be taken into        consideration as a covered life. The rider will terminate upon        the death of the surviving covered life.

Continue the Contract and Revoke the Withdrawal Feature of the Rider.

The charge is assessed on revocation date, and then no longer assessed.The covered life will be re-determined on the date of the continuationdate for death benefit purposes. If the covered life is greater than theage limitation at the time of continuation, the rider will terminate.The death benefit will be equal to contract value.

Effect of Death of Owner or Annuitant Before the Annuity CommencementDate.

The following tables describe the effect of the death of the owner orannuitant before the annuity commencement date.

TABLE 1 Single Life Election If the Deceased is And . . . And . . . Thenthe . . . Contract There is a The annuitant is Joint contract ownerOwner surviving living or deceased receives the DB, contract owner Riderterminates Contract There is no The annuitant is Rider terminates Ownersurviving living or deceased Designated Contract Owner Beneficiaryreceives DB Contract There is no The annuitant is Rider terminates Ownersurviving living or deceased Estate receives DB Contract Owner orBeneficiary Annuitant Contract Owner There is no Contract continues, isliving contingent annuitant no DB is paid, Rider and the contractcontinues owner becomes the contingent annuitant Annuitant ContractOwner There is no Rider terminates, is living contingent annuitantcontract owner and the contract receives DB owner waives their rightbecome the contingent annuitant Annuitant Contract Owner contingentannuitant Contingent is living is living annuitant becomes annuitant andthe contract and Rider continues Annuitant Contract Owner There is noContract owner is non-natural contingent annuitant receives DB, personRider terminatesContingent Annuitant Becomes Annuitant

If the annuitant dies where there is a contingent annuitant (who isdifferent from the owner/annuitant), then the rider continues and allprovisions of the rider remain the same, there are no resets nor DBspaid. Upon the death of the last surviving covered life, a DB is paid tothe beneficiary, and the rider terminates.

TABLE 2 Joint/Spousal Continuation Election If the Deceased is . . . And. . . And . . . Then the . . . Contract There is a The annuitant is Thesurviving contract Owner surviving contract living or owner continuesthe owner deceased contract and rider, the contract value is increasedto the death benefit value. Contract There is no The annuitant is If thespouse is the Owner surviving contract living or sole primary ownerdeceased beneficiary, follow spousal continuation rules for joint lifeelections Contract There is no The annuitant is Rider terminates Ownersurviving contract living or Estate receives DB owner or deceasedbeneficiary Annuitant Contract owner is If the spouse is the non-naturalsole primary person beneficiary, follow spousal continuation rules forjoint life elections Annuitant The owner is There is a living The ridercontinues; living contingent upon the death of the annuitant lastsurviving Covered Life, the rider will terminate.

Effect of Death after the Annuity Commencement Date.

The following table describes the effect of death after the annuitycommencement date.

TABLE 3 Single Life Election If the Deceased is And . . . And . . . Thenthe . . . Annuitant The annuitant Fixed Lifetime and The lifetime isalso the Period Certain is contingency ceases. contract owner electedThe remaining DB is paid under Period Certain.

TABLE 4 Joint/Spousal Continuation Election If the Deceased is . . . And. . . And . . . Then the . . . Annuitant The annuitant is also FixedLifetime The lifetime benefit the contract owner, and Period ceases. Theand there is no Certain is remaining DB is surviving Joint elected paidunder Period Annuitant Certain. Annuitant The annuitant is also FixedJoint and Lifetime Benefit the contract owner, and Survivor continuesuntil and there is a Lifetime and death of last surviving Joint PeriodCertain is surviving annuitant Annuitant electedFund Allocation Restrictions

The right to restrict investment is reserved in any investment option inthe case of a change of covered life after six months. If the investmentoption restriction is imposed, the contract owner has the followingoptions:

-   -   Reallocate all existing money and all new premium to a        non-restricted investment option, an available asset allocation        program, or fund-of-fund investment option as may be offered        from time to time.    -   Revoke the Withdrawal Feature.        If the restrictions are violated, the withdrawal feature will be        revoked. The Death Benefit continues as is upon the date of        revocation.        Aggregation

For purposes of determining the PB under the rider, one or more deferredvariable annuity contracts issued with the rider attached in the samecalendar year can be treated as one contract. If the contracts areaggregated, the period will change over which withdrawals are measuredagainst the benefit payment.

The issuing company will treat the effective date of the election untilthe end of the calendar year as a contract year for the purposes of theLBP limit. A pro rata rider charge will be taken at the end of thatcalendar year. As long as total withdrawals in that period do not exceedthe LBP, the withdrawals will not necessitate a reset.

In future calendar years, the LBP limits will be aggregated and will beon a calendar year basis. In other words, withdrawals under allaggregated contracts in a calendar year will be compared against thecombined LBP limits for the aggregated contracts. If withdrawals exceedthose combined limits, the aggregate PB will be set to the combinedcontract values of the aggregated contracts. The LBP will then equalwithdrawal percent multiplied by the new PB.

If withdrawals do not exceed those combined limits, each withdrawal willreduce the PB dollar for dollar. The withdrawal benefits relating to thecontract value reaching zero will not apply until the contract value ofall aggregated contracts reaches zero.

The rider charge will be taken at the end of each calendar year. It willbe deducted pro rata from all of the sub-accounts and fixed accounts ofthe aggregated contracts. If the contract values of all aggregatedcontracts are reduced below our minimum account rules in effect, theannuity options will be offered as defined earlier in thisspecification. The options will pay the combined LBP.

Annuity Commencement Date

If the annuity reaches the maximum ACD, which is the later of the10^(th) contract anniversary and the date the annuitant reaches age 90,the contract must be annuitized unless it is agreed upon to extend theACD. In this circumstance, the contract may be annuitized under standardannuitization rules, but under no circumstances will the amount payablebe less than your LBP, provided that the certain period does not exceedthe Death Benefit remaining at the ACD divided by the LBP.

Single Life Election:

A fixed lifetime and Period Certain Payout will be issued. The lifetimeportion will be based on the Covered Life determined at ACD. The CoveredLife is the Annuitant for this payout option. If there is more than oneCovered Life, then the lifetime portion will be based on both CoveredLives. The Covered Lives will be the Annuitant and Joint Annuitant forthis payout option. The lifetime portion will terminate on the firstdeath of the two. The minimum amount paid to owner under this AnnuityOption will at least equal the remaining DB under this rider.

If the oldest Annuitant is age 59 (or other predetermined age) oryounger, the date the payments begin will be deferred until the oldestAnnuitant attains age 60 (or other predetermined age) and is eligible toreceive payments in a fixed dollar amount until the later of the deathof any Annuitant or a minimum number of years.

If the Annuitant(s) are alive and age 60 (or other predetermined age) orolder, payments will be received in a fixed dollar amount until thelater of the death of any Annuitant or a minimum number of years. Theminimum number of years that payments will be made is equal to theremaining DB under this rider divided by the product of the payment baseon the ACD multiplied by the greater of the WP and 5% Single (4½%Spousal).

${Single}\mspace{14mu}{Election}\text{:}\mspace{14mu}\frac{DB}{{PB} \times {Max}\;\left( {{WP},{5\%}} \right)}$${Joint}\text{/}{Spousal}\mspace{14mu}{Election}\text{:}\mspace{14mu}\frac{DB}{{PB} \times {Max}\;\left( {{WP},{4\;\frac{1}{2}\%}} \right)}$This annualized amount will be paid over the greater of the minimumnumber of years, or until the death of any Annuitant, in the frequencythat is elected. The frequencies will be among those offered at thattime but will be no less frequent than annually. If, at the death of anyAnnuitant, payments have been made for less than the minimum number ofyears, the remaining scheduled period certain payments will be made tothe Beneficiary. A lump sum option is not available.Joint/Spousal Continuation Election:

The minimum amount paid to owner under this Annuity Option will at leastequal the DB under this rider. If the younger Annuitant is alive and age59 (or other predetermined age) or younger, the date that payments beginwill be automatically deferred until the younger Annuitant attains age60 (or other predetermined age) and is eligible to receive payments in afixed dollar amount until the death of the last surviving Annuitant or aminimum number of years.

If the Annuitants are alive and the younger Annuitant is age 60 or older(or other predetermined age), payments will be received in a fixeddollar amount until the death of the last surviving Annuitant or aminimum number of years. The minimum number of years that payments willbe made is equal to the remaining DB under this rider divided by the LBPat annuitization. This annualized amount will be paid over the greaterof the minimum number of years, or until the death of the last survivingAnnuitant, in the frequency that is elected. The frequencies will beamong those offered at that time but will be no less frequent thanannually. If, at the death of the last surviving Annuitant, paymentshave been made for less than the minimum number of years, the remainingscheduled period certain payments will be made to the Beneficiary. Alump sum option is not available.

If both spouses are alive, the owner will be issued a Fixed Joint &Survivor Lifetime and Period Certain Payout. The Covered Life andCovered Life's spouse will be the Annuitant and Joint Annuitant for thispayout option. The lifetime benefit will terminate on the last death ofthe two. If one spouse is alive, the owner will be issued a FixedLifetime and Period Certain Payout. The lifetime portion will be basedon the Covered Life. The Covered Life is the Annuitant for this payoutoption. The lifetime benefit will terminate on the last death of theCovered Life.

Premium Restrictions

Prior company approval is required on all subsequent premium paymentsreceived after the first 12 months. The approval rules are as follows.

-   -   Any subsequent premium(s) will not be accepted if it brings the        total cumulative subsequent premiums in excess of $100,000        without prior approval.    -   Payment enhancements and employee gross-up are not to be        included in premium total.        Revoking the Withdrawal Feature

In one embodiment, at any time following the earlier of SpousalContinuation or the fifth anniversary of the Rider effective date, theContract Owner may elect to revoke the Withdrawal Feature of the Rider.The Payment Base will go to zero and the Withdrawal Percent will go toZero, and LBP will go to Zero.

On the date the withdrawal feature is revoked, a pro rata share of theRider charge is equal to the Rider charge percentage multiplied by thePB, multiplied by the number of days since the last charge was assessed,divided by 365. The Rider Charge will be assessed on the revocationdate, and then will no longer be assessed. The Death Benefit continuesas is upon the date of the revocation. No other living benefit may beelected upon the revocation of the Withdrawal Feature.

In another embodiment, the Contract Owner can not elect to revoke thewithdrawal Feature. The Withdrawal Feature can be revoked in certaincircumstances by the issuing company.

Additional Annuity Contract(s) Rules

Additional terms of the contract(s) or rider(s) include the following.The benefits under the contract cannot be assigned. If the free lookprovision under the contract is exercised, the rider will terminate.

Subject to state approval, a rider will be made available on allcurrently available products issued on or after the date the rider islaunched for sale in the state of issue. This does not imply post-issueelection. Post-issue election will be determined on an as needed basis.

If the rider effective date is after the contract issue date, then theperiod between the rider effective date and the next contractanniversary will constitute a contract year.

If the rider effective date is after the contract issue date, then theperiod between the rider effective date and the next contractanniversary will constitute a contract year.

The employee gross-up is not considered premium for purposes of thepayment base and death benefit. Payment enhancements are not consideredpremium for purposes of the payment base and death benefit. Front-endloads are not taken from the premium for purposes of the payment baseand death benefit.

Turning now to the figures, FIG. 1 illustrates the manner in which a newannuity contract application is processed. The new applicationprocessing routine starts (block 102) when an application is completed.The annuity contract application and initial premium are received by theinsurance company (block 104). The annuity contract is then establishedthrough the contract establishing routine (block 106) as furtherdescribed in FIG. 2. After the annuity contract is established, theaccount value is then set up through the account value set routine(block 108), via the computer systems, as further specified in FIG. 3.Thereafter customer communication is established through the customercommunication routine (block 110) as further specified in FIG. 4. Theapplication processing routine ends at (block 112).

FIG. 2 is a flow chart that illustrates in more detail the manner inwhich an annuity contract is established. The annuity contractestablishing routine starts at (block 202). After receiving the annuitycontract application, customer demographics are determined (block 204).The customer demographics and other data from the annuity contractapplication are transmitted to the insurance company by any suitablemeans, such as electronic transmission, facsimile transmission,telephonic transmission, and the like. The customer demographics may bescanned in or electronically entered into the computer system by theinsurance company after the demographic data is determined. Suchdemographic information may include age, gender, date of birth, socialsecurity number, address, marital status, and the like. The customerdemographics may be used for a variety of purposes, such asidentification purposes or to locate a relevant life by searchinghis/her social security number. The customer demographics are also usedwhen determining and/or calculating a variety of factors that arerelated to the annuity contract, such as benefit amount calculations,tax considerations, and the like. The types of customer demographicsthat are determined are generally related to the type of annuitycontract application that is filled out by the relevant life. Thespecific product election is determined (block 206). For example, thespecific product may be elected from a group of different variableannuity products, which each have different characteristics includingthe costs and fees as well as the liquidity features associatedtherewith. The election of optional riders is determined (block 208).For example, the optional riders may be elected from a group ofdifferent riders each having various guaranteed withdrawal features. Theelection of investment options is determined (block 210). For example,the investment options include money market funds, bond funds, stockfunds, and the like. The beneficiary is elected (block 212). In oneaspect, this is the person who will collect the death benefits, if any.The source of the premium is determined (block 214). For example, thesource of the premium may come from the relevant life's personal fundsor may come from another annuity in the form of a transfer. It should beunderstood that the steps taken for establishing the contract mayproceed in various orders and that the order shown in FIG. 2 is forillustrative purposes only and is only one embodiment of said steps. Thecontract establishing routine ends at (block 216).

FIG. 3 is a flow chart that illustrates in more detail the manner inwhich an account value is set up. The account value set up routinestarts at (block 302). The funds are received (block 304). For example,the funds may be received via electronic transfer from a bank account orfrom another variable annuity holder. The funds are then allocated basedon investment elections (block 306). For example, the allocations can beaccomplished through a computerized system according to the investmentelections by the relevant life. Unit values are established for theannuity contract (block 308). For example, based on the performance ofthe underlying investment elections, unit values are established,preferably on a daily basis, for use in determining the resulting impacton the relevant life's annuity contract based on their specific fundallocations. For example the number of units that are applied to eachannuity contract is different for each relevant life based on the numberof units held within the annuity contract. It should be understood thatthe steps taken for setting up the account value may proceed in variousorders and that the order shown in FIG. 3 is for illustrative purposesonly and is only one embodiment of said steps. The account value set uproutine ends at (block 310).

FIG. 4 is a flow chart that illustrates in more detail the manner inwhich customer communication is established. The customer communicationroutine starts at (block 402). Communications with the customer may beaccomplished via email, facsimile, letter, telephone, and the like.Communication with the customer in one aspect relates to the issuing ofthe contract (block 404). Communication with the customer in one aspectrelates to the relevant confirmation of the previous contract issuancecommunication (block 406). Any regulatory-imposed communication with theclient is accomplished (block 408). It should be understood that thesteps taken for establishing customer communication may proceed invarious orders and that the order shown in FIG. 4 is for illustrativepurposes only and is only one embodiment of said steps. The customercommunication routine ends at (block 410).

FIG. 5 is a flow chart illustrating the appropriate steps after awithdrawal is requested. The withdrawal processing routine starts at(block 502). A withdrawal is first requested by the relevant life at(block 504). The withdrawal is then processed according to the contractrules (block 506). The contract rules are embedded in a computer systemor the like and vary according to the type of annuity contract. Forexample, in certain embodiments, a requested withdrawal amount by therelevant life may be limited by the contract rules to a specificwithdrawal percent that is applied by the computer system, and whereinthe contract rules specify the withdrawal percent according to the ageof the relevant life or the number of years since the contract wasestablished. Therefore, the contract rules govern the data flow in thecomputer system. The contract rules are administratively built into thecomputer system to obviate the need for manual intervention by theinsurance company. The account value is reduced according to thecontract rules (block 508). The death benefit is reduced according tothe contract rules (block 510). The withdrawal benefit is adjustedaccording to the contract rules (block 512). The check or other form ofpayment is issued (block 516). The appropriate tax forms are generatedat year end (block 518). It should be understood that the steps takenfor processing withdrawals may proceed in various orders and that theorder shown in FIG. 5 is for illustrative purposes only and is only oneembodiment of said steps. The withdrawal processing routine ends at(block 520).

FIG. 6 is a flow chart illustrating a preferred embodiment of thepresent invention comprising a data processing method for administeringa deferred variable annuity contract for a relevant life. It should beunderstood that the order of the successive method steps in each Figureherein is shown for the sake of illustrating but one example, with thatsaid, the order of method steps can proceed in any variety of orders. Inone embodiment of the present invention, the invention comprises a dataprocessing method for administering a deferred variable annuity contractfor a relevant life, the annuity product having a payment base, acontract value and lifetime benefit payments.

The annuity contract processing routine starts (block 600), and themethod sometime later enters the calculation of the payment base phase(block 602) that is preferably a function of the previous premiumpayments and withdrawals by the relevant life. The present methoddetermines a withdrawal percent table that provides a particularwithdrawal percent based on each birthday of the relevant life (block604). If requested by the relevant life, the present method periodicallyaccepts premium payments from the relevant life (block 606) whichincrease the payment base and the contract value. If requested by therelevant life and the covered life is older than a predetermined age(i.e. 60 years old), the present method periodically calculates alifetime benefit payment for the relevant life (block 608) whichdecreases the contract value. If requested by the relevant life, thepresent method periodically calculates a withdrawal payment (block 610)that is in excess of the lifetime benefit payment for the relevant lifewhich decreases each of: the contract value and the payment base.Preferably, the lifetime benefit payment is determined by the followingformula:LBP withdrawal=(the Withdrawal Percent)×(a Withdrawal Base),wherein the withdrawal percent is responsive to said withdrawal percenttable and wherein the relevant life does not have to wait for thecontract anniversary date in order to request the withdrawal percentthat corresponds to his age as provided by the withdrawal percent chart.

Referring next to FIG. 7, depicted is a preferred embodiment of a systemon which the methods of the present invention may be implemented. In oneexample of the preferred embodiment, the insurance contract generatingsystem 714 would generally be used by an insurance provider 702, howeverthe system may be operated by any individual or organization offering aninsurance product as outlined in the present specification withoutdeparting from the spirit of the present invention. System 714 may beimplemented in many different ways such as part of a single standaloneserver or as a network server or servers, which may be distributedacross multiple computing systems and architectures. Preferably, thecentral processing computer or network server includes at least onecontroller or central processing unit (CPU or processor), at least onecommunication port or hub, at least one random access memory (RAM), atleast one read-only memory (ROM) and one or more databases or datastorage devices. All of these later elements are in communication withthe CPU to facilitate the operation of the network server.

The network server may also be configured in a distributed architecture,wherein the server components or modules are housed in separate units orlocations. Each of the modules described may be implemented as singleservers or one or more or all of the modules may be incorporated into asingle server. These servers will perform primary processing functionsand contain at a minimum, a RAM, a ROM, and a general controller orprocessor. In such an embodiment, each server is connected to acommunications hub or port that serves as a primary communication linkwith other servers, clients or user computers and other related devices.The communications hub or port may have minimal processing capabilityitself, serving primarily as a communications router. A variety ofcommunications protocols may be part of the system, including but notlimited to: Ethernet, SAP, SAS™, ATP, Bluetooth, GSM and TCP/IP.

In the preferred embodiment, all of the modules described herein areoperably inter-connected via a central communications bus 738. Thecommunications bus 738 is able to receive information from each of themodules, as well as to transmit information from one module to another.The insurance contract generating system 714 further includes a displaymodule 704, and a generating module 706. The generating module is usedfor generating an insurance contract, wherein the insurance contractprovides coverage to an individual or group for at least one eventdefined in the insurance contract.

The insurance contract generating system 714 additionally includes apayment module 708 for making payments to an insured individual or groupfor a predetermined period of time as defined by the deferred annuityinsurance contract.

The system further comprises a beneficiary module 710 for choosing abeneficiary to receive payments from the insurance provider in theinstance of an insured individual's death. Furthermore, the systemcomprises a dependent module 712 for offering an insurance contractstructured according to the methods of the present invention todependents of an individual eligible for the insurance contractdescribed herein.

Additionally, the insurance contract generating system 714 includes: astorage drive 716 for receiving data stored on a storage disc, aprocessing module 718 for processing digital data received by andcontained in the insurance contract generating system 714, acommunication module 720 for bi-directional communication with externaland telecommunications systems, a data storage module 722 for storingand managing digital information, a text data input module 724 forinputting data in the form of text, and a data input module 726 forconverting to digital format documents and images and inputting theminto the insurance contract generating system 714.

Finally, the insurance contract generating system 714 includes: an audiodata input module 728 for receiving and inputting audio information, anaudio data output module 730 for outputting data in audio format (i.e.recorded speech, synthetically generated speech from digital text, etc),a memory module 732 for temporarily storing information as it is beingprocessed by the processing module 718, a universal serial bus interfacemodule 734 for receiving and transmitting data to and from devicescapable of establishing a universal serial bus connection, and a digitaldata input interface module 736 for receiving data contained in digitalstorage devices.

Data storage device may include a hard magnetic disk drive, tape,optical storage units, CD-ROM drives, or flash memory. Such data storagedevices generally contain databases used in processing transactionsand/or calculations in accordance with the present invention. In oneembodiment, the database software creates and manages these databases.Insurance-related calculations and/or algorithms of the presentinvention are stored in storage device and executed by the CPU.

The data storage device may also store, for example, (i) a program(e.g., computer program code and/or a computer program product) adaptedto direct the processor in accordance with the present invention, andparticularly in accordance with the processes described in detailhereinafter with regard to the controller; (ii) a database adapted tostore information that may be utilized to store information required bythe program. The database includes multiple records, and each recordincludes fields that are specific to the present invention such asinterest rates, contract value, payment base value, step-ups, premiums,subscribers, payouts, claims, etc.

The program may be stored, for example, in a compressed, an uncompiledand/or an encrypted format, and may include computer program code. Theinstructions of the program may be read into a main memory of theprocessor from a computer-readable medium other than the data storagedevice, such as from a ROM or from a RAM. While execution of sequencesof instructions in the program causes the processor to perform theprocess steps described herein, hard-wired circuitry may be used inplace of, or in combination with, software instructions forimplementation of the processes of the present invention. Thus,embodiments of the present invention are not limited to any specificcombination of hardware and software.

Suitable computer program code may be provided for performing numerousfunctions such as providing a deferred annuity insurance contract to anindividual, generating a deferred annuity insurance contract, and makingpayments to the individual as defined in the deferred annuity insurancecontract. The functions described above are merely exemplary and shouldnot be considered exhaustive of the type of function, which may beperformed by the computer program code of the present inventions.

The computer program code required to implement the above functions (andthe other functions described herein) can be developed by a person ofordinary skill in the art, and is not described in detail herein.

The term “computer-readable medium” as used herein refers to any mediumthat provides or participates in providing instructions to the processorof the computing device (or any other processor of a device describedherein) for execution. Such a medium may take many forms, including butnot limited to, non-volatile media, volatile media, and transmissionmedia. Non-volatile media include, for example, optical or magneticdisks, such as memory. Volatile media include dynamic random accessmemory (DRAM), which typically constitutes the main memory. Common formsof computer-readable media include, for example, a floppy disk, aflexible disk, hard disk, magnetic tape, any other magnetic medium, aCD-ROM, DVD, any other optical medium, punch cards, paper tape, anyother physical medium with patterns of holes, a RAM, a PROM, an EPROM orEEPROM (electronically erasable programmable read-only memory), aFLASH-EEPROM, any other memory chip or cartridge, a carrier wave asdescribed hereinafter, or any other medium from which a computer canread.

Various forms of computer readable media may be involved in carrying oneor more sequences of one or more instructions to the processor (or anyother processor of a device described herein) for execution. Forexample, the instructions may initially be borne on a magnetic disk of aremote computer. The remote computer can load the instructions into itsdynamic memory and send the instructions over an Ethernet connection,cable line, or even telephone line using a modem. A communicationsdevice local to a computing device (or, e.g., a server) can receive thedata on the respective communications line and place the data on asystem bus for the processor. The system bus carries the data to mainmemory, from which the processor retrieves and executes theinstructions. The instructions received by main memory may optionally bestored in memory either before or after execution by the processor. Inaddition, instructions may be received via a communication port aselectrical, electromagnetic or optical signals, which are exemplaryforms of wireless communications or data streams that carry varioustypes of information.

Servers of the present invention may also interact and/or control one ormore user devices or terminals. The user device or terminal may includeany one or a combination of a personal computer, a mouse, a keyboard, acomputer display, a touch screen, LCD, voice recognition software, orother generally represented by input/output devices required toimplement the above functionality. The program also may include programelements such as an operating system, a database management system and“device drivers” that allow the processor to interface with computerperipheral devices (e.g., a video display, a keyboard, a computer mouse,etc).

For example, a user provides instructions for the amount of the livingbenefit payment that is requested. It should be understood that the usermay communicate with the computing system directly or indirectly throughanother party, such as the insurance provider 702. In the event the usercommunicates with an insurance provider 702, the insurance provider 702than receives and transfers information, to and from the insurancecontract generating system 714 via the text data input module 724, audiodata input module 728, audio data output module 730 and the displaymodule 704. For example, the relevant life may provide instructions tothe insurance provider 702 indicating the amount of living benefitpayments the relevant life would like to receive. Furthermore, as usedherein the data storage module 722 is also referred to as a storagedevice. The processing module 718 is contained within the insurancecontract generating system 714, which is coupled to the storage device,the storage device stores instructions that are utilized by theprocessor. The instructions comprise: (i) an instruction for calculatinga payment base; (ii) an instruction for calculating a contract value;(iii) an instruction for determining a withdrawal percent table thatprovides a particular withdrawal percent based on each birthday of therelevant life; and (iv) an instruction for calculating a lifetimebenefit payment; wherein the lifetime benefit payment withdrawal isdetermined by the following formula: LBP withdrawal=(a WithdrawalPercent)×(a Withdrawal Base), wherein the withdrawal percent isresponsive to the withdrawal percent table, and the relevant life doesnot have to wait for the contract anniversary date in order to requestthe withdrawal percent that corresponds to his age, as provided by apredetermined withdrawal percent table.

Turning now to FIG. 8, shown is supplemental table 824, wherein table824 illustrates exemplary values, which are strictly for the purposes ofillustration and are not meant to limit the scope of the invention. Morespecifically, supplemental table 824 illustrates the initial investmentor payment base 826 invested by the relevant life. For this example,payment base 826 is $100,000. Furthermore, supplemental table 824provides information that is pertinent to the example illustrated bytable 800.

Referring now to table 800, illustrated are exemplary lifetime benefitpayments 818, 820 and 822 as function of age for annuities paid to therelevant life under various conditions. “Date” column 802, “Age” column804, and “Comment” column 806 all directly correspond with one another.Additionally, “Date,” “Age,” and “Comment” columns 802, 804 and 806contain exemplary dates, ages and descriptions of events respectively,all of which serve to effectively illustrate the birthday benefit asdescribed by the present invention. “Date” column 802 tracks thepertinent dates throughout the example. “Age” column 804 preferablytracks the age of the relevant life in years. “Comment” column 806 liststhe importance of the respective date. For example, as illustrated by“Comment” column 806, the “Effective Date” of the annuity contractoccurred on Jan. 1, 2007. More specifically, “Current Benefit” column808 represents the lifetime benefit payments 818 made to the relevantlife, which begins on the relevant life's 65^(th) birthday (Jul. 1,2008) and terminates on the relevant life's 76 birthday (Jul. 1, 2019).Thus, in this example, the relevant life collected the first lifetimebenefit payment 818 on the first year of eligibility, wherein the firstyear of eligibility commenced once the relevant life turned 65 and noton the anniversary date of the annuity contract, which is generally theoccurrence in most annuity contracts. Hence, by applying the informationfrom supplemental table 824, the relevant life is entitled to a 5.0%withdrawal rate of payment base 826 (i.e. $100,000). Therefore, asillustrated by table 800, the relevant life receives 23 lifetime benefitpayments of $5,000 over the course of approximately 11 years. “CurrentBenefit” column 810 illustrates the lifetime benefit payments 820 madeto the relevant life, which begins on the second anniversary of theannuity contract (Jan. 1, 2009) and terminates on the relevant life's76^(th) birthday (Jul. 1, 2009). Consequently, the relevant lifecollected the first lifetime benefit payment 820 on the first year ofeligibility, wherein the first year of eligibility commenced on the dateof the second anniversary of the annuity contract. Thus, by applying theinformation from supplemental table 824, the relevant life is entitledto a 5.5% withdrawal rate of payment base 826 (i.e. $100,000).Therefore, as illustrated by table 800, the relevant life receives 22lifetime benefit payments of $5,500 over the course of approximately 11years. Furthermore, “Birthday Benefit” column 812 illustrates thelifetime benefit payments 822 made to the relevant life, which begins onthe relevant life's 65^(th) birthday (Jul. 1, 2008) and terminates onthe relevant life's 76 birthday (Jul. 1, 2019). Consequently, therelevant life collected the first lifetime benefit payment 822 on thefirst year of eligibility, wherein the first year of eligibilitycommenced on the date of the relevant life's 65^(th) birthday. Thus, byapplying the information from supplemental table 824, the relevant lifeis entitled to a 5.5% withdrawal rate of payment base 826 (i.e.$100,000). Therefore, as illustrated by table 800, the relevant lifereceives the optimal amount of lifetime benefit payments, wherein therelevant life receives 23 lifetime benefit payments of $5,500 over thecourse of approximately 11 years. Additionally, although the length oftime is represented in years, various other periods of time may be used(i.e. days, weeks, months, decades, etc.). Furthermore, all valuesillustrated by tables 800 and 824 are merely exemplary and are usedstrictly for the purposes of illustration, thus these values should notserve to limit the scope of the present invention.

FIG. 9 illustrates a graph 900, titled “Guaranteed Lifetime BenefitPayments—Anniversary Benefit vs Birthday Benefit,” which furtherillustrates the example represented by table 800 of FIG. 8. Morespecifically, graph 900 includes a “Guaranteed Lifetime Benefit” orwithdrawal scale 902, which illustrates withdrawal values or lifetimebenefit payments 910, 912, and 914 as a function of specific events 918during a four-year period, ranging from the years of 2007 to 2010.Specific events 918 are illustrated on the x-coordinate of graph 900 soas to accurately correspond to table 800 of FIG. 8. Essentially, graph900 visually illustrates the example represented within table 800 ofFIG. 8. The key 904 provided by FIG. 9 illustrates the symbols used torepresent which line on graph 900 corresponds to the respective columnof table 800. More specifically, “Current Benefit” column 808 isgraphically illustrated on graph 900 by “Current Benefit” line 906,which is represented by a line containing squares. For example, once therelevant life turns 65, “Current Benefit” line 906 accuratelyillustrates a lifetime benefit payment 910 of $5,000. Furthermore,“Current Benefit” line 906 remains at $5,000 with respect to therelevant life's age and the contract anniversary throughout graph 900,thus, accurately expressing lifetime benefit payments 818 of “CurrentBenefit” column 808 of table 800. Additionally, graph 900 visuallyillustrates each of the remaining above-referenced columns 810 and 812by lines 908 and 909 respectively. Therefore, each line 906, 908, and909, illustrated on graph 900 directly corresponds to each of theabove-referenced columns 808, 810, and 812 of table 800, respectively.

It should be understood that several of the method steps of the presentinvention (for example blocks 602-604) require the input of a contractowner in order to be able to determine the respective values. However, acomputer is required to use the method of the present invention; thecalculations and appropriate data records are performed by a computer.

For example, in one embodiment of the present invention, the paymentbase is related to premium payments by the relevant life wherein some ofthe premium payments may be discretionary. In one embodiment, thelifetime benefit payment is dependent on a predetermined withdrawalpercent table that provides a particular withdrawal percent based oneach birthday of the relevant life, and is determined by the companyissuing the annuity and/or the relevant life. Preferably, the withdrawalpercent is based on the age of the relevant life at the time of thefirst requested lifetime benefit payment and is provided according tothe predetermined withdrawal percent table that is determined by thecompany issuing the annuity. The annuity commencement date isdiscretionary and is selected by the company issuing the annuity and/orthe relevant life, with certain restrictions. The initial guaranteeddeath benefit amount is discretionary and is determined by the companyissuing the annuity and/or the relevant life. Preferably, the companyissuing the annuity sets the initial guaranteed death benefit amount forcalculation purposes. In a preferred embodiment, the initial guaranteeddeath benefit amount is equal to the payment base.

The lifetime benefit payment is paid periodically, such as yearly,quarterly, monthly, weekly, etc. The lifetime benefit payment that isrequested by the relevant life for a given period may be any amountgreater than zero and equal to or less than the (the WithdrawalPercent)×(a Withdrawal Base), wherein the Withdrawal Percent isresponsive to said withdrawal percent table and wherein the relevantlife does not have to wait for the contract anniversary date in order torequest the withdrawal percent that corresponds to his age as providedby the withdrawal percent table. The available lifetime benefit paymentwithdrawal percent that is determined at each period by theaforementioned formula. In a preferred embodiment, the relevant lifedoes not have to wait for the contract anniversary date in order torequest the withdrawal percent that corresponds to his age as providedby a predetermined withdrawal percent table.

The withdrawal base may be equal to the Payment Base, the ContractValue, or the greater of the two. In most cases, the value of (thePayment Base)×(the Withdrawal Percent) will not be equal to (the presentContract Value)×(the Withdrawal Percent). Therefore, in some embodimentsthe higher of these two values is the highest available lifetime benefitpayment available for that period. However, the relevant life does nothave to elect the highest possible available lifetime benefit payment.The value that is requested, if any, for the lifetime benefit paymentfor that period will be subtracted from the contract value, but not fromthe payment base. Therefore, the higher the lifetime benefit paymentrequested for a period, the greater the possible impact on the value of(the present Contract Value)×(the Withdrawal Percent) for the subsequentperiod.

Preferably, the withdrawal percent is a function of the relevant life'sage; in other words, the withdrawal percent increases with the age ofthe relevant life and is provided by the predetermined withdrawalpercent table. In one embodiment, once the first lifetime benefitpayment withdrawal is taken, then the withdrawal percent is fixed forthe remainder of the contract. In another embodiment, the withdrawalpercent continues to rise with the relevant life's age, no matter if therelevant life has already begun to take lifetime benefit payments. Inanother embodiment, the withdrawal percent may either increase ordecrease over the term of the annuity. Alternatively, the withdrawalpercent may fluctuate over the term of the annuity.

In a further embodiment, the present method further comprises the stepof collecting a rider fee or collecting an account maintenance fee. Inanother embodiment, the present method further comprises the step of:calculating a death benefit for a beneficiary upon the death of therelevant life, wherein the death benefit is the greater of: (a) apredetermined guaranteed death benefit amount; and (b) the presentcontract value. Alternatively, the guaranteed death benefit is paid tothe beneficiary only if the relevant life dies during the accumulationphase. Preferably, the value of the annuity payments, if any, equals thevalue of the last guaranteed lifetime benefit payment.

In another embodiment, the present invention comprises a deferredvariable annuity contract comprising: (i) means for calculating apayment base; (ii) means for calculating a contract value; (iii) meansfor determining a withdrawal percent table that provides a particularwithdrawal percent based on each birthday of the relevant life; and (iv)means for calculating a lifetime benefit payment; wherein the lifetimebenefit payment withdrawal is determined by the following formula:LBP withdrawal=(a Withdrawal Percent)×(a Withdrawal Base),wherein the withdrawal percent is responsive to the withdrawal percenttable and wherein the relevant life does not have to wait for thecontract anniversary date in order to request the withdrawal percentthat corresponds to his age as provided by a predetermined withdrawalpercent table.

In another embodiment, the present invention comprises in a system foradministering a deferred variable annuity contract during theaccumulation phase, the improvement comprising: administration meansoperative to calculate a lifetime benefit payment, wherein the lifetimebenefit payment withdrawal is determined by the following formula:LBP withdrawal=(a Withdrawal Percent)×(a Withdrawal Base),wherein the withdrawal percent is responsive to a withdrawal percenttable and wherein the relevant life does not have to wait for thecontract anniversary date in order to request the withdrawal percentthat corresponds to his age as provided by a predetermined withdrawalpercent table.

In another embodiment, the annuity product includes a step-up provisionwherein the payment base is increased in response to positiveperformance of the underlying investments of the contract for a givenperiod.

Other formulas may be utilized to determine the yearly lifetime benefitpayment amount, wherein the withdrawal base is related to other valuesbesides the payment base and/or the contract value.

The following description and examples further illustrate the preferredfeatures of the present invention.

Each time a lifetime benefit payment withdrawal request is received, thewithdrawal percent is provided by utilizing the withdrawal percent tableand looking up the corresponding age of the relevant life. The relevantlife does not have to wait for the contract anniversary date in order torequest the withdrawal percent that corresponds to his age as providedby a predetermined withdrawal percent table. The lifetime benefitpayment withdrawal amount is then determined by the following formula:LBP withdrawal=(the Withdrawal Percent)×(a Withdrawal Base),wherein the withdrawal percent is determined by said withdrawal percenttable and wherein the relevant life does not have to wait for thecontract anniversary date in order to request the withdrawal percentthat corresponds to his age as provided by the withdrawal percent table.The withdrawal base may be equal to the payment base, the contractvalue, or the greater of the payment base and the contract value. In theembodiment where the withdrawal base is equal to the greater to thegreater of the payment base and the contract value, a test will beperformed to determine the greater of: (i) (the Payment Base)×(theWithdrawal Percent); and (ii) (the Contract Value)×(the WithdrawalPercent). The “guaranteed lifetime benefit payment” is equal to (thePayment Base)×(the Withdrawal Percent); and the “maximum lifetimebenefit payment” is equal to (the Contract Value)×(the WithdrawalPercent). The relevant life may request a lifetime benefit paymentamount during each period that is up to the LBP withdrawal amount, whichin one embodiment is the greater of the “guaranteed lifetime benefitpayment” and the “maximum lifetime benefit payment”. See Example 1below.

The following example illustrates one embodiment of the present methodand system. The following withdrawal percent table is set for thefollowing example. Such predetermined values for the withdrawal percenttable are strictly for the purposes of illustration. For example, thepredetermined withdrawal percentages may be in the range of 0% to 100%,and more preferably in the range of 0% to 50%.

Withdrawal Percent Table: 5.0% for attained ages 60 to 64 5.5% forattained ages 65 to 69 6.0% for attained ages 70 to 74 6.5% for attainedages 75 to 79 7.0% for attained ages 80 and above

EXAMPLE 1

Relevant life buys an annuity contract at age 64 and 8 months;

Relevant life is eligible for a 5% Withdrawal Percent today;

Relevant life turns 65 years old in 4 months;

Relevant life is eligible for a 5.5% Withdrawal Percent immediately onhis birthday (when he turns 65 years old), and does not have to wait forthe contract anniversary date following his 65th birthday, when therelevant life would be 65 and 8 months.

EXAMPLE 2

In the following example, no lifetime benefit payments are requested bythe relevant life. The values listed for the “guaranteed lifetimebenefit payment” and the “maximum lifetime benefit payment” are simplythe maximum available lifetime benefit payments for each period listed.“guaranteed lifetime benefit payment”=(the Payment Base)×(the WithdrawalPercent)“maximum lifetime benefit payment”=(the Contract Value)×(the WithdrawalPercent)For the purposes of illustration, the relevant life is 60 years old onMar. 31, 1983 and his birthday is on Mar. 31, 1983. That is, hisbirthday and the contract anniversary date are the same.

TABLE 5 Calculation of the Guaranteed or Maximum Lifetime BenefitPayments maximum guaranteed Age of lifetime lifetime relevant PeriodPremium Contract benefit Payment benefit life Ended Payment Valuepayment Base payment 60 Mar. 31, 100,000 100,000 5,000 100,000 5,0001983 61 Mar. 31, — 98,817 4,941 100,000 5,000 1984 62 Mar. 31, — 112,4075,620 100,000 5,000 1985 63 Mar. 31, — 145,528 7,276 100,000 5,000 198664 Mar. 31, — 166,825 8,341 100,000 5,000 1987 65 Mar. 31, — 166,4729,156 100,000 5,500 1988 66 Mar. 31, — 185,012 10,176 100,000 5,500 198967 Mar. 31, — 205,801 11,319 100,000 5,500 1990 68 Mar. 31, — 228,52412,569 100,000 5,500 1991

Having thus described the invention in rather full detail, it will beunderstood that such detail need not be strictly adhered to, but thatadditional changes and modifications may suggest themselves to oneskilled in the art, all falling within the scope of the invention asdefined by the subjoined claims.

While the present invention has been described with reference to thepreferred embodiment and several alternative embodiments, whichembodiments have been set forth in considerable detail for the purposesof making a complete disclosure of the invention, such embodiments aremerely exemplary and are not intended to be limiting or represent anexhaustive enumeration of all aspects of the invention. The scope of theinvention, therefore, shall be defined solely by the following claims.Further, it will be apparent to those of skill in the art that numerouschanges may be made in such details without departing from the spiritand the principles of the invention. It should be appreciated that thepresent invention is capable of being embodied in other forms withoutdeparting from its essential characteristics.

What is claimed is:
 1. A computer system for processing data relating toa deferred variable annuity contract during the accumulation phase,comprising: a data storage device storing data relating to the deferredvariable annuity contract, including: a payment base value, a contractvalue adjusted for increases or decreases in values of investmentsselected by an owner of the deferred variable annuity contract, awithdrawal percent, an issue date of the deferred variable annuitycontract, a birth date of a relevant life, and a formula fordetermining, based on the withdrawal percent and the payment base value,an available periodic benefit payment amount available for withdrawalduring a plurality of periods without decrease in the payment base valuebut with a decrease in the contract value equal to an amount of thewithdrawal; and a processor in communication with the data storagedevice, the processor configured to: access data indicative of awithdrawal percent applicable to a date, the withdrawal percent beingdependent on an age of the relevant life as of the date, the age of therelevant life being determined by the processor based on yearssubsequent to the birth date of the relevant life and independent of theissue date of the deferred variable annuity contract; and provide anoutput signal indicative of the applicable withdrawal percent.
 2. Thecomputer system of claim 1, wherein the processor is further configuredto furnish the output signal to a data storage device for storage of theapplicable withdrawal percent, and to a display device for display ofthe applicable withdrawal percent.
 3. The computer system of claim 2,wherein the processor is further configured to access the applicablewithdrawal percent, employ the applicable withdrawal percent indetermining an available periodic benefit payment amount, and providingan output signal to a display device for display of the determinedavailable periodic benefit payment amount.
 4. The computer system ofclaim 1, wherein the stored data further comprises data indicative of aplurality of withdrawal percent values associated with time periodscommencing on birthdays of the relevant life.
 5. The computer system ofclaim 1, further comprising a payment module in communication with theprocessor and configured to effect payment to the relevant life inaccordance with data indicative of a request for a withdrawal.
 6. Thecomputer system of claim 1, wherein the stored data comprises dataindicative of a first withdrawal percent associated with dates prior toa selected birthday of the relevant life and a second withdrawal percentassociated with dates on and after the selected birthday of the relevantlife.
 7. The computer system of claim 1, wherein the processor isfurther configured to determine whether a value of withdrawals since amost recent contract anniversary is greater than the available benefitpayment amount, and to provide an output signal indicative of nodecrease in the payment base responsive to determining that the value ofwithdrawals since a most recent contract anniversary is not greater thanthe available benefit payment amount.
 8. The computer system of claim 6,wherein the stored data further comprises data indicative of a thirdwithdrawal percent associated with dates on and after a second selectedbirthday of the relevant life at least five years after the firstselected birthday.
 9. The computer system of claim 8, wherein the storeddata further comprises data indicative of a fourth withdrawal percentassociated with dates on and after a third selected birthday of therelevant life at least ten years after the first selected birthday. 10.The computer system of claim 8, wherein the stored data relates to asingle life election, and the data storage device further stores dataindicative of a further set of withdrawal percents associated with ajoint/spousal continuation election, comprising data indicative of: afirst joint/spousal withdrawal percent associated with dates prior tothe selected birthday of the relevant life and lower than the singlelife election withdrawal percent associated with dates prior to theselected birthday of the relevant life, and a second joint/spousalwithdrawal percent associated with dates on and after the selectedbirthday of the relevant life and, lower than the single life electionwithdrawal percent associated the with dates on and after the selectedbirthday of the relevant life; wherein the relevant life for thejoint/spousal continuation election is a younger of the joint lives. 11.A computer-implemented method for processing data relating to a deferredvariable annuity contract, comprising: accessing by a processor, from adata storage device in communication with the processor, data relatingto the deferred variable annuity contract, including a contract valueadjusted for increases or decreases in values of investments selected byan owner of the deferred variable annuity contract, a payment basevalue, withdrawal percent data, data indicative of an issue date of thedeferred variable annuity contract and data related to a birthday of arelevant life; determining by the processor, based on an age of therelevant life as of a selected date, the age of the relevant life beingbased on the data related to the birthday of the relevant life andindependent of the issue date of the deferred variable annuity contract,a withdrawal percent applicable to the date, and providing by theprocessor an output signal indicative of the applicable withdrawalpercent; wherein a product of the withdrawal percent and a withdrawalbase value determines an available periodic benefit payment amountavailable for withdrawal without reduction of the payment base value butwith a decrease in the contract value equal to an amount of thewithdrawal.
 12. The computer-implemented method of claim 11, furthercomprising receiving the output signal at a display device and providinga display of the applicable withdrawal percent.
 13. Thecomputer-implemented method of claim 11, further comprising receivingthe output signal at a memory device, storing the applicable withdrawalpercent in the memory device, calculating, using the stored applicablewithdrawal percent, an available benefit payment, and providing theavailable benefit payment amount to a display device for display. 14.The computer-implemented method of claim 11, further comprisingreceiving by a payment module in communication with the processor dataindicative of an amount of a requested withdrawal and effecting paymentby the payment module to the relevant life in accordance with the amountof the requested withdrawal.
 15. The computer-implemented method ofclaim 11, further comprising: accessing by the processor from the datastorage device a current contract value and an amount of a withdrawal;determining an updated contract value by subtracting the amount of thewithdrawal from the current contract value; determining, based on theapplicable withdrawal percent, the withdrawal base value and a sum ofwithdrawals during an applicable period, that the payment base value isto be decreased; determining, responsive to a determination that thepayment base value is decreased, an updated payment base value; andproviding an output signal having data indicative of the updatedcontract value and the updated payment base value.
 16. Thecomputer-implemented method of claim 11, further comprising: accessingby the processor from the data storage device a current contract value;determining an updated contract value by subtracting the amount of awithdrawal from the current contract value; determining, based on theapplicable withdrawal percent, the withdrawal base value and a sum ofwithdrawals during an applicable period, that the payment base value isnot to be decreased; responsive to a determination that the payment basevalue is not decreased, providing an output signal indicative of theupdated contract value and an unchanged payment base value.
 17. Thecomputer-implemented method of claim 11, wherein the accessed datacomprises data indicative of a first withdrawal percent value applicableto withdrawals prior to a selected birthday of the relevant life and asecond withdrawal percent value applicable to withdrawals on or afterthe selected birthday of the relevant life.
 18. A tangiblecomputer-readable medium having processor-executable instructions storedthereon, which instructions, when executed by a processor, cause theprocessor to: access, from a data storage device in communication withthe processor, data relating to a deferred variable annuity contract,including a contract value adjusted for increases or decreases in valuesof investments selected by an owner of the deferred variable annuitycontract, a payment base value, withdrawal percent data, data indicativeof an issue date of the deferred variable annuity contract, and datarelated to a birthday of a relevant life; determine, based on whether adate is prior to a date of a selected birthday of the relevant life, andindependent of the issue date of the deferred variable annuity contract,a withdrawal percent applicable to the date, and provide an outputsignal having data indicative of the withdrawal percent; wherein amountsof benefit payments available on a periodic basis without reduction ofthe payment base value, but with a decrease in the contract value equalto an amount of the withdrawal, are determined based on the applicablewithdrawal percent and a withdrawal base value.
 19. The tangiblecomputer-readable medium of claim 18, wherein the instructions furthercause the processor to cause the withdrawal percent value of the outputsignal to be stored in a memory device, and to determine an availablebenefit payment amount based on the stored withdrawal percent value andthe withdrawal base value.
 20. The tangible computer-readable medium ofclaim 18, wherein the instructions further cause the processor to accessdata indicative of an amount of withdrawals made during a currentcontract year, determine a total amount of the withdrawals made duringthe current contract year and the amount of a current request for awithdrawal, and determine whether the payment base value is decreasedbased on a comparison of the total amount with a product of thewithdrawal base value and the applicable withdrawal percent.
 21. Thetangible computer-readable medium of claim 20, wherein the instructionsfurther cause the processor to, responsive to a determination that thepayment base value is decreased, determine a decrease in the paymentbase value based on data including the current contract value and anamount that the total amount of the withdrawals made during the currentcontract year and the amount of the requested withdrawal, exceed aproduct of the withdrawal base value and the applicable withdrawalpercent.
 22. The tangible computer-readable medium of claim 18, whereinthe withdrawal percent data includes a first withdrawal percent valueapplicable to withdrawals prior to the selected birthday of the relevantlife and a second withdrawal percent value applicable to withdrawals onor after the selected birthday of the relevant life.
 23. The tangiblecomputer-readable medium of claim 22, wherein the selected birthday isthe 65^(th) birthday of the relevant life.